The Marriage Penalty

Using the spreadsheet supplied with this website, here is an example of the marginal
tax hump for a single individual with a $30,000 Social Security benefit.

Single

TaxFree

NetBefore

Your Personal Hump

SSB

Start

End

Width

Single

$30,000

$42,400

$60,114

$64,568

$73,706

$9,138

Partners

$60,000

$84,800

$120,228

$129,136

$147,412

$18,276

Single

TaxFree

NetBefore

Your Personal Hump

SSB

Start

End

Width

Single

$30,000

$42,567

$60,579

$65,122

$73,706

$8,584

Partners

$60,000

$85,134

$121,158

$130,244

$147,412

$17,168

If two single individuals were living together as domestic partners, their combined tax
hump would merely be twice the size of each individual.

Here is the same spreadsheet representing the marginal tax hump faced by the same couple
if they decided to get married and file a joint return.

Single

TaxFree

NetBefore

Your Personal Hump

SSB

Start

End

Width

Single

$30,000

$42,400

$60,114

$64,568

$73,706

$9,138

Partners

$60,000

$84,800

$120,228

$129,136

$147,412

$18,276

Married

$60,000

$77,373

$110,498

$119,405

$126,941

$7,536

Penalty

$7,427

$9,730

$9,731

$20,471

$10,740

Single

TaxFree

NetBefore

Your Personal Hump

SSB

Start

End

Width

Single

$30,000

$42,567

$60,579

$65,122

$73,706

$8,584

Partners

$60,000

$85,134

$121,158

$130,244

$147,412

$17,168

Married

$60,000

$77,784

$111,373

$120,459

$126,941

$6,482

Penalty

$7,350

$9,785

$9,785

$20,471

$10,686

What Causes The Marriage Penalty?

The primary cause of the Marriage Penalty is the starting positions for the taxability
of your Social Security benefits. The calculation of the “basis” for this taxation
is the same, basically half of your Social Security benefits plus your other taxable
income. 50% taxability starts when the basis exceeds $25,000 for a single individual,
which would double to $50,000 for domestic partners. But the 50% taxability
starts at only $32,000 for a married couple, and 85% taxability starts at $44,000,
which is still $6,000 less than the $50,000 combined start of the 50% taxability
level for the domestic partners.

So, basically, the married couple’s Social Security benefits are taxed at lower
income levels. Their potential tax free income is $7,427 less, and their personal tax
hump starts $9,731 before that of the domestic partners. Since this results in them
saving less tax dollars at the lower income levels, the size of their personal hump
is also smaller because they have less to give back to the IRS.

At higher income levels, when everyone is paying their full hump taxes, everything
basically evens out because at that point everyone is paying taxes on the same 85% of
their Social Security Benefits. Married couples just pay it earlier. The only penalty
that remains is that the additional over 65 standard deduction is only $1,300 for
married individuals and $1,600 when you are single.